How Will Verizon-MCI Merger Affect You?
Posted on: Tuesday, 15 February 2005, 00:00 CST
Feb. 15--How much consumers might be affected by a Verizon-MCI merger depends upon where they live.
Just about anyone in Pennsylvania can be an MCI long-distance customer. But only people who live in the Verizon service territory could get local telephone service from MCI.
For technical and regulatory reasons, MCI didn't compete against the state's 36 other traditional telephone companies for local service.
Pennsylvania's telephone service territory map looks somewhat like the map of 19th century Germany. Oddly shaped territories and tiny islands surrounded by other companies abound. Being in one of the little principalities doesn't necessarily mean you get limited service choices, but it does mean you couldn't get MCI and its lower prices.
MCI entered the residential phone market in Pennsylvania in the summer of 2000 at the high-water mark of local telephone competition. By the end of 2003, MCI had signed up 246,058 former Verizon residential local-service customers in Pennsylvania to become the state's fourth-largest local phone company. That was more than any other competitive telephone company by a long shot, and up from 195,000 at the end of 2002.
Still, the customer count paled in comparison to that of Verizon, which serves 4.3 million local customers statewide.
MCI's influence went beyond mere numbers, however. It was an innovator, offering one of the first bundled and discounted packages of local and long-distance calling. The all-for-one-price package was called the Neighborhood, and it debuted in April 2002. Six months later, Verizon came out with a slightly more expensive but similar plan called Veriations All.
So what happens now? Will the Neighborhood go the way of People Express and the Edsel?
Good question. And neither Verizon nor MCI will really answer it, other than to say that MCI will "continue" to phase out its consumer telephone service. That means if you're an MCI customer, you'll eventually be a Verizon customer, at least for local phone service.
No information has been released on when a switch-over will occur, and it depends, of course, on whether regulators approve the merger.
State Attorney General Tom Corbett said Monday through a spokeswoman that his Antitrust Section will examine the merger plan to make sure it doesn't harm consumers, such as raising the price of telephone service by removing a major competitor.
State Small Business Advocate William Lloyd said he presumes that Verizon will honor MCI's contracts with small-business customers, at least until the contracts expire. After that, he expects Verizon will start charging its usual prices for whatever services a small business purchases.
Larger companies in Pennsylvania have many options for telephone service, with a dozen or more telecommunications firms actively competing for their business. But for small businesses with one or two lines, the choices are far fewer.
Lloyd intends to monitor the situation closely, and he is waiting to see if the state Public Utility Commission will formally examine the merger.
"If the commission has a case, we certainly will be participating," he said.
State Consumer Advocate Irwin Popowsky said the removal of MCI as a competitor would hurt because the regional Bell companies have shown no inclination to compete directly against each other. That is to say, SBC Communications or Bell South or Qwest, the other three regional Bells, don't attempt to steal customers from Verizon or each other.
He isn't as optimistic that companies offering Internet calling, or VoIP, will be viable competitors to Verizon.
"VoIP still has to use somebody's wires," Popowsky said. "They are very much dependent on those wires, much like the [competitive telecommunications companies] were."
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Source: The Patriot-News
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